China State Construction Engineering (601668.SS): Parent to Buy Rmb500mn-1bn of A-shares Over the Next 12 Months

研报英文原文证据摘录

China State Construction Engineering (601668.SS): Parent to Buy Rmb500mn-1bn of A-shares Over the Next 12 Months

actors in our assumptions of its property completion schedules, sales pipeline and ASPs.

Risks

Fundamentally, COLI is exposed principally to the property market in China. The most notable downside risks to COLI's share

price are economy- and policy-related. Any weaker-than-expected GDP growth for the Chinese and/or global economy, and

the risk of a hard landing in the domestic economy could negatively affect buyer sentiment in the China property market. In

addition, any stronger-than-expected pick-up in inflation and property prices could affect housing affordability for

homebuyers. This could also attract new austerity measures. On the policy front, any further tightening measures and policy

changes by the central government with regard to mortgage applications and approvals, project financing, and property pre-

sales to curb speculation and over-investment could adversely affect the bottom line and cash flow of property developers,

and homebuyer sentiment. These risks could impede the shares from reaching our target price.

China State Construction

(3311.HK; HK$7.99; 1; 20 Jul 26; 16:10)

Valuation

Our target price for CSCI of HK$12 is based on ~6x 2026E P/E. The PE target is in line with -0.5SD to mean. Our TP implies

0.8x PB for 2026E, which is equivalent to -0.5SD. We employ a conservative -0.5SD despite infra construction outlook being

modest in China. However, our model projects a 3-yr EPS CAGR of 4% on the back of growing popularity of MIC and BIPV with

curtain wall in China, HK and Macau. Our PE target remains at the high end of the PE range among China construction and

infrastructure comps, but PEG of 0.5-0.6x is in line with peers.